Question
Base Corp and Eastern Tech are two identical companies except for their capital structures. Neither firm pays taxes. Both firms have EBIT of $35,000 in
Base Corp and Eastern Tech are two identical companies except for their capital structures. Neither firm pays taxes. Both firms have EBIT of $35,000 in perpetuity.
Base Corp is unlevered and has 5,000 shares outstanding, each worth $20.
Eastern Tech is levered and has $25,000 in debt at a cost of debt of Rd = 12%.
- How much is Base Corp worth?
- How much is Eastern Tech worth?
- What is Eastern Techs market value of equity?
- How much would it cost to buy 30% of each company?
- Is Eastern Tech more risky than Base Corp? Please explain.
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Handbook Of Anti Money Laundering
Authors: Dennis Cox
1st Edition
0470065745, 978-0470065747
